Hire employees in Finland

Finnish employees enjoy high levels of social protection, a good work-life balance and a generally high quality of life. Hiring a worker who benefits from such a stable and advantageous work environment means hiring a productive and happy employee who delivers great work.

What’s more, employees in Finland are used to flexible working hours – in fact, agile working hours have been part of the Finnish working culture for several decades – so scheduling a team call with several remote employees situated in different time zones should be no problem for your new recruit from Finland.

Although, legally speaking, it is also possible to conclude oral or electronic employment contracts, it is best practice to put a written employment contract in place which outlines the basic terms of employment such as:

• Identification of both parties

• Date of commencement (and employment duration for temporary contracts)

• Workplace

• Job description, duties and responsibilities

• Basic salary as well as other compensation or benefits

• Working hours

• Total number of holidays

• Notice periods for employment termination

• Probation period

• Reference to collective agreements

• Terms applying for work conducted abroad

Even if no written contract is concluded, the employee must still receive the full details of his or her employment agreement as mentioned above in writing. The majority of employment contracts in Finland are permanent but fixed-term contracts are equally possible.

Probation Period

It is common practice in Finland that employees and employers agree on a probationary period. However, trial periods should not exceed six months – four months under certain collective agreements.

Working Hours and Breaks

Employees in Finland usually work 40 hours per week, i.e. eight hours per day and five days per week. As for rest periods and breaks, the Working Hours Act rules that employees must have an uninterrupted rest period of at least 35 hours per week – preferably, this should include Sunday.

Additional regulations:

• a mandatory rest break of at least 30 minutes – in most cases even an hour – if the employee’s daily working time exceeds six hours

• daily rest period cannot be shorter than eleven hours

Overtime

Employers are obligated to seek the employee’s consent every time overtime work is necessary. In no case should an employee’s weekly working time exceed 48 hours – overtime included. Over the course of four months, an employee should not work more than 138 additional hours – furthermore limited to 250 hours per year.

Overtime pay is 150% of the employee’s normal wages for the first two hours worked overtime in one day. Every following hour must be paid at a rate of 200%.

Employers can issue payments either once or twice a month.

Minimum Wage

There is no statutory minimum wage in Finland. Instead, minimum remuneration rates are determined by collective agreements.

Sick Pay

After one month of employment, employers are obligated to provide full sick pay for their employees for up to 10 consecutive days (day of falling ill, plus 9 following days). Thereafter, the employee receives sick leave benefits from his or her sickness insurance amounting to 70% of the usual salary.

Sick leave is generally limited to 300 working days. It is the employee’s duty to immediately inform their employer of their absence and provide a medical certificate within the first three days of absence from work.

Bonuses

There are no legal provisions regarding the payment of a 13th salary, but there are many collective bargaining agreements which mandate the payment of a holiday bonus equal to 50% of the pay employees receive during their annual leave.

Employees and employers are subject to the following tax and social security contribution rates (last review February 2023):

Taxes

Employers

20%

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• 20% corporate tax rate

• 24% VAT (standard rate)

Employees

up to 44% *

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• 12.64% to 44% national tax

• 7.4% municipal tax on certain income (average)

• 1% to 2.1% church tax (optional)

Social security

Employers

around 20%

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• 17.39% pension insurance

• around 0.57% occupational accident insurance

• around 0.06% group life insurance

• 0.52% unemployment insurance on gross salaries up to EUR 2,251,500 (2.06% on excesses)

• 1.53% health insurance

Employees

around 11%

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• 1.96% health and sickness benefits insurance

• 7.15% pension insurance

• 1.5% unemployment insurance (only employees aged 17 to 64)

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

During their first year with an employer, employees receive two days of paid leave for each month they have worked. In every following year of service, they gain two and a half days of paid leave for each month worked. This leads to a total of 24 paid days off during the first year of employment and 30 days of paid annual leave starting with the second year of employment. Saturdays are included in the leave calculation. Finland observes 13 public holidays – including Easter Sunday and Whit Sunday.

Maternity Leave and Paternity Leave

Finland's family leave system was reformed in 2022. Under the new rules, pregnant women receive a statutory allowance for 40 days which they can use during the last weeks of pregnancy. For further information see next section.

Parental Leave

Parents of newborn children are entitled to a parental leave allowance covering 320 days (i.e. 160 days per parent). 63 days of each parent's individual leave entitlement are transferable to the other parent.

The leave can be used until the child reaches the age of two. It is possible to split the leave period into up to four individual leave periods. In case of multiple births, the allowance is paid for an additional 84 days (per child).

Additional Leave and Benefits

After having completed one year of service, employees are entitled to unpaid study leave in order to undergo additional training or to study.

In addition to employment termination by default – i.e. in case of a fixed-term contract – resignation and mutual agreement, Finnish labour law recognises the following grounds for employee dismissal (non-exhaustive list):

• redundancy, collective dismissal or other reasons linked to the business situation

• summary dismissal due to gross misconduct

• breach of contract

• employee’s underperformance

• employee’s incapability to return to work after long-term illness or injury

The statutory notice periods employers have to respect when dismissing an employee range from two weeks to six months, depending on the employee’s length of service:

• less than one year of service: two weeks

• between one and four years of service: one month

• between four and eight years of service: two months

• between eight and twelve years of service: four months

• more than twelve years of service: six months

Notice periods for employees are shorter: When wishing to resign, employees have to give notice to their employer at least 14 days prior to the intended resignation date if their length of service does not exceed five years – one months if it does.

Severance pay may be attributed to senior employees who have reached the age of 45 and who are subject to collective dismissal. However, payments are not to be made by the employer but are withdrawn from public funds. Most employees are only entitled to any outstanding payments until the end of their notice period.